Fears over a foreign-led military intervention in Syria and an escalation of the conflict to the rest of the Middle East resurfaced amid reports that Israel carried out missile tests in the Mediterranean.
Geopolitical concerns were partially offset, however, by the release of further data showing that the UK economic recovery is gathering pace. The latest PMI figures showed the construction sector grew at the fastest pace in six years in August.
Meanwhile, OECD has nearly doubled its expectations for the UK economy this year. Growth in 2013 is now expected to reach 1.5% against 0.8% previously forecast.
At 12.30pm, the FTSE 100 had shed a mere 6 points at 6,499, with Vodafone the main drag after shares retreated as investors cashed in following several sessions of strong gains.
The UK telecom company continued to feed most of the UK market’s chatter after it sealed the deal with Verizon Communications over the sale of its 45% stake in their American partnership. Now investors and analysts alike are trying to establish how the US$84bln cash windfall, around 71% of the proceeds, will be distributed, conditional to regulators and shareholders approving the transaction, of course.
There was also lingering talk that the company could become a potential takeover target after it concluded one of the biggest business deals ever.
“Vodafone’s de-coupling from Verizon in the US, its European mobile footprint and its accelerated investment strategy could catch the eye of other global consolidators like AT&T,” said James Britton, an analyst at Japanese broker Nomura.
Among small caps, shares in the uranium exploration group Forte Energy (LON:FTE) shot up 31% on AIM after it announced its shares had been suspended on the Australian Stock Exchange.
The halt relates to the putative acquisition of Leo Mining & Exploration, and comes ahead of an update on the due diligence process and deal negotiations.
“Forte expects that it will be in a position to provide such an update before the end of the week,” the company said in statement.
Leo’s main asset is a 48% stake in Toronto-listed Mkango Resources (CVE:MKA), which owns a world-class rare earths deposit in Malawi as well as uranium assets.
Shares in online video specialist Blinkx (LON:BLNX) were also up, boosted by positive notes issued by a couple of City brokers.
Citigroup and Jefferies both have ‘buy’ recommendations on the stock, with the duo talking up the company’s investment case.
Citi’s Thomas Singlehurst lifts his target price by 55p to 185p driven by the prospect of better long-term growth.
The company, whose main business is a video search engine, has set its guidance conservatively, he said.
David Reynolds at Jefferies, meanwhile, who kicked off coverage with the top rating today with a 190p target price, called online video advertising an “extravagant growth hot spot”.
However, Kea Petroleum (LON:KEA) remained in a dark place, after it revealed it is reviewing its strategic options for the Puka oil discovery in New Zealand.
“The directors believe that the scale of the Puka discovery, and the current challenges for small sized oil explorers in accessing capital markets, merit a review to assess strategic alternatives that will enable shareholders to maximise full value from the Puka fields,” the company said in a statement.
Having received interest from larger companies, Kea has hired Sydney based Gresham Advisory Partners to assist the review process.
Separately, Kea also revealed that it is relinquishing the PEP51155 permit, which hosts the Angus prospect, because the quality of existing seismic data is inadequate. It also pointed to a diminished appetite for deep gas plays as another reason for the decision.
Shares lost over 35% in midday trade.
@UK (LON:ATUK) also fell, though by 5% only, after the cloud-based e-commerce specialist failed to impress with its interim results.
The firm posted a 26% increase in turnover for the six months to end June to £1.375mln, while the e-commerce segment increased by 53% to £860,000. This helped the company narrow its loss before tax by 17% to £301,000 in the first half of this year.
The company told investors it expects to deliver full year results in line with market expectations.